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Foreign ownership concerns labelled 'xenophobic'

MARK COLVIN: The chairman of Australia's biggest cotton property has described concerns about its sale to a foreign investor as 'xenophobic'.

The Federal Government has given Chinese and Japanese textile consortium Shandong RuYi approval to bid for an 80 per cent stake in Cubbie Station in southern Queensland.

Nearby communities are worried that the sale will see the end of jobs for locals, and irrigators worry that it could get in the way of the Murray-Darling Basin Plan.

But Cubbie's chairman Keith DeLacy says the company has to comply with Australian rules and regulations, as Stephanie Smail reports.

STEPHANIE SMAIL: Cubbie Station sits on the border of Queensland and New South Wales, near the tiny towns of St George and Dirranbandi. The cotton-producing giant went administration in 2009, with debts of about $300 million.

The company has been the region's biggest employer, but residents in nearby communities are worried its sale will mean job losses. Cubbie's chairman Keith DeLacy says those concerns are 'stoking xenophobic flames'. He says locals won't notice the difference.

KEITH DELACY: I honestly can't see how there will be a negative effect on the surrounding shire or on surrounding people. They've got to get on and run it as efficiently as they can, you know, from the point of view of producing cotton and making a profit, so I can't, they have got to source their inputs and everything from that particular region; it's the only way you can run an efficient operation.

STEPHANIE SMAIL: The State Government is supportive of the sale. The Deputy Premier Jeff Seeney.

JEFF SEENEY: We will need foreign investment to grow the Queensland economy the way that we want to see it grow over the next few years to address the financial situation that the Queensland Government's in.

So I think we should be welcoming foreign investment. There should be safeguards built around it, and from what I've seen of this particular exercise, there are safeguards in place.

STEPHANIE SMAIL: The Federal Treasurer Wayne Swan gave the foreign consortium the go ahead to bid for Cubbie under eight conditions, three of them covering water management. Cubbie has permits to divert and store more than half a million megalitres of water - enough to fill Sydney Harbour.

Andrew Gregson from the New South Wales Irrigators Council says the conditions are too broad, and unlikely to be binding.

ANDREW GREGSON: I can't see that the third condition, sell any surplus water allocations through the water market, could be binding, because I have a sneaking suspicion that that would in fact be contrary to the water trade rules that are currently mooted as part of the draft basin plan. The owner of the water entitlement is perfectly entitled to do whatever it is that they wish with it within the bounds of the rules around that entitlement.

STEPHANIE SMAIL: He's worried about the implications for the Murray-Darling Basin Plan.

ANDREW GREGSON: What irrigators in NSW, and indeed, across the Murray-Darling Basin are concerned about is the potential market influence that that very large bundle of water entitlements can have. If it's a private operator, a nongovernment operator, then we can pretty much predict the way that they will operate, and indeed there is a very large private operator on the Lower Darling in Tandow farms, but they operate in accordance with market provisions.

STEPHANIE SMAIL: Queensland Nationals Senator Barnaby Joyce has been a vocal opponent of foreign investment in Cubbie Station. The approval of the foreign bid for the company has sparked a war of words between he and Wayne Swan on Twitter. Senator Joyce has appealed to Mr Swan on local radio to stop the sale.

BARNABY JOYCE: Nothing is too late if the will of the people is there, and I'm appealing to people to make the call to your Federal members, make the call to Mr Swan, make the call and stand up for your nation, because it's the only way we can turn something like this around.

STEPHANIE SMAIL: In a statement, Mr Swan says new investment is important for the ongoing viability of operations at Cubbie Station, and without the sale up to 170 jobs could be lost.